Shares of software vendor Salesforce.com (CRM) are up $3.45, or 2.4%, at $148.75 after Morgan Stanley’s Adam Holt this morning raised his rating on the stock to Overweight from Equal Weight, with a $200 price target, writing that workloads on “cloud” computing facilities, such as the company’s “Force.com” online platform, is going to rise 50% per annum, compounded, through the next three years, based on Morgan Stanley’s survey of 300 IT executives.

Usage of cloud-based applications will increase from 51% of companies today to 80%, Holt says the data show.

Salesforce should be the biggest beneficiary, Holt thinks, and he believes consensus estimates for the company don’t reflect the rate of growth, instead modeling something like 20% cloud industry growth.

Based on an expectation Salesforce will garner an increasing share of the “software-as-a-service” pie, not to mention “platform-as-a-service” business, Holt raised his estimates for the company for fiscal 2013 and 2014. He sees $2.17 billion in revenue for this year, the same as his prior estimate, but for 2013 he sees revenue of $2.57 billion, from a prior estimate of $2.53 billion, and for 2014, he sees revenue of $3.23 billion, up from $3.082 billion previously.

That should produce non-GAAP EPS next year of $1.90, rather than the $1.80 he’d previously expected, and EPS of $2.43 in 2014, rather than the $2.31 he’d previously modeled. Holt models Salesforce earning $1.32 this year.

Holt’s $200 target is based on a 47 multiple of his projected free cash flow per share of $4.11 next year, which he suggests is a 1.3 times growth multiple.

Article courtesy of Tech Trader Daily

Shares of software vendor Salesforce.com (CRM) are up $3.45, or 2.4%, at $148.75 after Morgan Stanley’s Adam Holt this morning raised his rating on the stock to Overweight from Equal Weight, with a $200 price target, writing that workloads on “cloud” computing facilities, such as the company’s “Force.com” online platform, is going to rise 50% per annum, compounded, through the next three years, based on Morgan Stanley’s survey of 300 IT executives.

Usage of cloud-based applications will increase from 51% of companies today to 80%, Holt says the data show.

Salesforce should be the biggest beneficiary, Holt thinks, and he believes consensus estimates for the company don’t reflect the rate of growth, instead modeling something like 20% cloud industry growth.

Based on an expectation Salesforce will garner an increasing share of the “software-as-a-service” pie, not to mention “platform-as-a-service” business, Holt raised his estimates for the company for fiscal 2013 and 2014. He sees $2.17 billion in revenue for this year, the same as his prior estimate, but for 2013 he sees revenue of $2.57 billion, from a prior estimate of $2.53 billion, and for 2014, he sees revenue of $3.23 billion, up from $3.082 billion previously.

That should produce non-GAAP EPS next year of $1.90, rather than the $1.80 he’d previously expected, and EPS of $2.43 in 2014, rather than the $2.31 he’d previously modeled. Holt models Salesforce earning $1.32 this year.

Holt’s $200 target is based on a 47 multiple of his projected free cash flow per share of $4.11 next year, which he suggests is a 1.3 times growth multiple.

Article courtesy of Tech Trader Daily

Shares of software vendor Salesforce.com (CRM) are up $3.45, or 2.4%, at $148.75 after Morgan Stanley’s Adam Holt this morning raised his rating on the stock to Overweight from Equal Weight, with a $200 price target, writing that workloads on “cloud” computing facilities, such as the company’s “Force.com” online platform, is going to rise 50% per annum, compounded, through the next three years, based on Morgan Stanley’s survey of 300 IT executives.

Usage of cloud-based applications will increase from 51% of companies today to 80%, Holt says the data show.

Salesforce should be the biggest beneficiary, Holt thinks, and he believes consensus estimates for the company don’t reflect the rate of growth, instead modeling something like 20% cloud industry growth.

Based on an expectation Salesforce will garner an increasing share of the “software-as-a-service” pie, not to mention “platform-as-a-service” business, Holt raised his estimates for the company for fiscal 2013 and 2014. He sees $2.17 billion in revenue for this year, the same as his prior estimate, but for 2013 he sees revenue of $2.57 billion, from a prior estimate of $2.53 billion, and for 2014, he sees revenue of $3.23 billion, up from $3.082 billion previously.

That should produce non-GAAP EPS next year of $1.90, rather than the $1.80 he’d previously expected, and EPS of $2.43 in 2014, rather than the $2.31 he’d previously modeled. Holt models Salesforce earning $1.32 this year.

Holt’s $200 target is based on a 47 multiple of his projected free cash flow per share of $4.11 next year, which he suggests is a 1.3 times growth multiple.

Article courtesy of Tech Trader Daily

Shares of software vendor Salesforce.com (CRM) are up $3.45, or 2.4%, at $148.75 after Morgan Stanley’s Adam Holt this morning raised his rating on the stock to Overweight from Equal Weight, with a $200 price target, writing that workloads on “cloud” computing facilities, such as the company’s “Force.com” online platform, is going to rise 50% per annum, compounded, through the next three years, based on Morgan Stanley’s survey of 300 IT executives.

Usage of cloud-based applications will increase from 51% of companies today to 80%, Holt says the data show.

Salesforce should be the biggest beneficiary, Holt thinks, and he believes consensus estimates for the company don’t reflect the rate of growth, instead modeling something like 20% cloud industry growth.

Based on an expectation Salesforce will garner an increasing share of the “software-as-a-service” pie, not to mention “platform-as-a-service” business, Holt raised his estimates for the company for fiscal 2013 and 2014. He sees $2.17 billion in revenue for this year, the same as his prior estimate, but for 2013 he sees revenue of $2.57 billion, from a prior estimate of $2.53 billion, and for 2014, he sees revenue of $3.23 billion, up from $3.082 billion previously.

That should produce non-GAAP EPS next year of $1.90, rather than the $1.80 he’d previously expected, and EPS of $2.43 in 2014, rather than the $2.31 he’d previously modeled. Holt models Salesforce earning $1.32 this year.

Holt’s $200 target is based on a 47 multiple of his projected free cash flow per share of $4.11 next year, which he suggests is a 1.3 times growth multiple.

Article courtesy of Tech Trader Daily

Today, Barclays Capital analyst Manav Patnaik initiated coverage of Gartner (IT) and IHS (IHS) with Overweight and Equal Weight ratings, and price targets of $50 and $90, respectively.

Patnaik wrote that the fundamental outlook for both companies was sound, and that both deserve premium valuations, given their strong and consistent cash flow. Both also have “strong market positioning, large addressable markets, highly predictable and recurring revenue…attractive margins and ROIC, and strong management teams.” However, Patnaik sees ISH as more fully valued at this point:

Besides the usual risks of economic sensitivity, data security, and competition, we see high valuations (25x+ P/E’s; 15x+ P/FCF) and investor expectations as the most notable risks for both stocks. We believe that their attractive business models and long-term growth opportunities warrant premium valuations, but it does come with very high investor expectations, which leaves very little room for error.

We prefer IT to IHS for four primary reasons: 1) higher comfort with IT’s addressable market and organic growth potential; 2) better ROIC (25%+ vs. 10%+); 3) cheaper valuation; and 4) IHS being more acquisitive, faces higher M&A deal and integration risks, in addition to implementation risks from a new ERP system in the short term.

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Morgan Stanley’s european software analyst Adam Wood this morning raised his rating on shares of SAP AG (SAP) to Overweight from Equal Weight, with a €54 price target on SAP’s ordinary shares, arguing that the company’s “core” business is primed to “accelerate,” given that SAP is “in the sweetspot of enterprise IT spending.”

Morgan Stanley’s survey of U.S. chief information officers, as well as recent results from Oracle (ORCL) and Accenture (ACN), suggest enterprise IT spending is showing continued “momentum,” writes Wood. That fact should help SAP, combined with the fact that the company has made some important changes: “SAP has appointed new co-CEOs, revised its maintenance pricing structure and launched a series of new products that are reviving its reputation for innovation.”

Wood raised his 2011 revenue estimate to €3.83 billion from a prior €3.73 billion, and raised his 2012 estimate to €4.32 billion from a prior €4.08 billion.

Moreover, the 10% growth in combined license and software sales in 2012 that the Street is currently modeling can probably be achieved just on the basis of the core products, such as ERP, business intelligence and analytics, PLM, middleware, and database sales, writes Wood. Everything else — the HANA product, the Business By Design offering, and SAP’s mobility products — would be gravy, he argues.

SAP shares today fell 1.4% to €43.79 in European trading. American Depository Shares of SAP fell 57 cents, or 0.9%, to $63.48.

Article courtesy of Tech Trader Daily

How about that Morgan Stanley mega report on Tesla Motors (TSLA), the one that has pushed the shares up and up by $4.56, or 19%, today to $28.27?

In raising the firm’s rating on Tesla from Equal Weight to Overweight this morning, you’ve got to hand it to Adam Jonas and his team for sheer chutzpah: the price target is, well, a bit above the current price, at $70.

Jonas writes that the “conditions are ripe for a shake-up of a complacent, century-old industry,” and that as electric cars come to comprise “a significant minority of global light vehicle sales medium-term and the majority long-term,” Tesla will be “America’s Fourth Automaker.”

What conditions, you ask?

High oil prices, and “government support accelerate the shift away from the internal combustion engine,” writes Jonas. That should lead to electric vehicles being 5.5% of global car shipments and 7% of U.S. shipments by 2020.

The key for Tesla is making electric vehicles a “mass market” phenomenon in the $30,000 price tag-range. And key to that is “fully utilizing” its facility in Fremont, California, where partner Toyota (TM) had produced half a million cars annually until it was shuttered a year ago, following which Toyota in May said it would purchase $50 million of Tesla stock and help the company build its “Model S” sedan at the Fremont plant.

“Tesla is a top-line story,” writes Jonas, “driven by their ability to capture a modest share of the growing electric vehicle market.” Out of that total 5.5% of global shipment that ma be electric in 2020, Jonas models the company selling 7.3% of that.

He sees the Model S shipping late next year, at a volume of about 2,000 units, and then the “Model X” by 2014, and the “Gen 3” in 2017. In 2020, Tesla should be getting 9% of its shipment volume from the Model S, 17% from the Model X, 62% from Gen 3, less than 1% from the “Roadster,” and 11% from “the supply of third-party power trains.”

By that time, unit volume will have surged from an estimated 2,400 units this year to 240,000 units, bringing in sales of $9.5 billion, Ebitda of $1.5 billion, and net income of $976 million.

But the in the meantime, the company’s biggest hurdle will be its burn rate: Tesla may reaching operating profitability by 2014, but it’s cash crunch will come in 2013, when “gross liquidity” falls to $146 million from what may be $362 million this year. Positive cash flow will be crucial then.

As for valuation, the discounted cash flow model used to derive the $70 target reflects a weighted average cost of capital of 12%, and 60% to 70% of the value is in the terminal value, Jonas notes.

But given losses over the next few years, Jonas adds the caveat, “On any valuation metric one would use to value a traditional auto company over a typical earnings horizon of 2 to 3 years, Tesla will appear anything but cheap.”

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He may be down and out, but this man spotted near the 405 has not lost his spark. Based on this photo alone, I already know he has a better sense of humor than most. Now, I’m not saying he didn’t sleep with Lindsay, so this isn’t about irony. This guy is ahead of the curve and using it as a call for sympathy from the masses. Everyone knows engaging in that sort of thing with her is a fast track to misery and compromised physical/mental health. Just look at Wilmer Valderrama. Read the full story

Morgan Stanley analyst Bill Lu today raised his rating on the ordinary shares of Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), the world’s largest contract chip manufacturer, to Overweight from Equal Weight, and raised his price target on the shares to 85 new Taiwan dollars from 69.

Lu sees and increasing share of chip production at TSM, especially from smartphones, and also the prospect for improving results from the company’s “thin-film” solar energy products.

Lu writes that the Street has been overly concerned about a potential glut in the supply of tablet computers this year. Tablets are a “structural positive,” but smartphones “constribute much more to foundry revenues than tablets.” Tablets are probably just 4% of manufacturing revenue for TSM this year, versus smartphones at 20% to 25%.

On that score, TSM should benefit as the world moves to smartphones from cheaper devices, given that TSM has a higher proportion of the manufacture of chips for smartphones than it does for the cheaper models. Smartphones require more advanced parts, thus benefitting TSM’s lead in contract chip manufacturer, opines Lu.

As for tablets, TSM benefits to the extent that its semiconductor content in a tablet is as much as a third higher than it is in notebook computers. The potential for an overall increase in semiconductor content inside of consumer electronics devices could help TSM outperform the overall semiconductor market, he thinks.

As for solar, “Our checks suggest that TSMC and partner Stion have made technology breakthroughs recently with the thin-film approach,” writes Lu. Capacity is likely to be low this year for the technology, dubbed “CIGS,” at a mere 100 megawatts, but it could “ramp significantly” next year, if successful, he writes.

Lu acknowledges that while Japan provided 4% of TSM’s revenue in 2010, it could have a larger adverse effect depending on how the disaster there impacts the overall electronics supply chain.

TSM’s ordinary shares traded in Taiwan traded down slightly today to 68.50. The company’s American Depository Receipts on the New York Stock Exchange were down 43 cents, or almost 4%, at $11.48.

Article courtesy of Tech Trader Daily

Shares of Netflix (NFLX) are down $5.88, or 2.4%, at $241.61 after Morgan Stanley’s Scott Devitt cut his rating on the stock to Equal Weight from Overweight, given that the stock’s now trading at about 41 times enterprise value as a multiple of projected 2012 earnings per share, in line [...]

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